Working Paper: NBER ID: w11615
Authors: Jesse M. Shapiro
Abstract: From 1940 to 1990, a 10 percent increase in a metropolitan area's concentration of college-educated residents was associated with a .8 percent increase in subsequent employment growth. Instrumental variables estimates support a causal relationship between college graduates and employment growth, but show no evidence of an effect of high school graduates. Using data on growth in wages, rents and house values, I calibrate a neoclassical city growth model and find that roughly 60 percent of the employment growth effect of college graduates is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This finding contrasts with the common argument that human capital generates employment growth in urban areas solely through changes in productivity.
Keywords: No keywords provided
JEL Codes: R11; N92; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Concentration of college-educated residents (R23) | Employment growth (J23) |
| Concentration of college-educated residents (R23) | Productivity growth (O49) |
| Concentration of college-educated residents (R23) | Quality of life improvements (I31) |
| Concentration of college-educated residents (R23) | Growth in rental prices and house values (R21) |
| Concentration of high school graduates (I23) | Employment growth (J23) |